EUROPEAN COMMISSION MOVES TO INVESTIGATE 13 BANKS IN DERIVATIVES COLLUSION

 

The European commission is moving to investigate and sanction major banking institutions, such as Citigroup, Deutsche Bank and Goldman Sachs, UBS, BNP Paribas, BofA, and others for colluding to reduce losses from derivatives trading.  The collusion is a clear breach of the EU regulations - antitrust and banking .

The banks under investigations were accused of shutting out exchanges to protect their institutions from losses and, principally, competition.  They are accused of preventing the exchanges from getting into the credit derivatives business between 2006 and 2009.  

The finding stems from a wider investigation on interest rate manipulation for both Libor and Euribor rates.  

By keeping the derivatives to themselves and denying or curtailing access to them, they basically are trying to keep all of the profits between themselves.  

One example of such illicit activity, is the delay encountered by Deutsche Borse AG and the CME Group from obtaining licences to enter the industry.  The two companies were unable to obtain the CDS exchange trading licenses they needed from Markit and ISDA, who were following the directive of investment banks not to concede the licensing, according to the preliminary investigation. 


Source : France 24/ 07.01.13